Retain More When you Recognise Good Work

Companies that are restructuring or going through a merger should consider another approach to retaining valuable employees other than just throwing money at them, even something as simple as being able to openly recognise good work. According to a recent McKinsey Quarterly report “Retaining key employees in times of change”, there is a better and less costly way to keep good people – and it can put the company in a stronger position to seize opportunities as the economy picks up. Companies should target the key players who are most critical and most at risk of leaving, and offer them a mix of financial and non-cash incentives geared to their aspirations and concerns and recognise good work when it happens. A European industrial company applied this approach during a recent relocation and restructuring, and found that it used only 25 percent of the budget it had spent before on a broad, cash-based employee retention scheme. Here are three ways to keep top talent without breaking the bank: 1. Find the “hidden gems” Look for the “hidden gems” that are critical to business success. Not just the usual high-flying sales people and senior executives, but the more average performers whose skills or social networks may be valuable to the company. These gems could be in IT, finance, or admin. For example, the product-development manager nearing retirement age that is no longer on the company’s list of “high potentials” yet is crucial to ensuring a healthy product pipeline. Some sales support personnel who fill orders can be just as important as the star salespeople these people will respond well if you recognise good work that is performed by them. 2. Be mindful of their mind-set One company that was restructuring identified two different employee mind-sets: • A family-oriented group worried about relocating and uprooting their families. They were offered incentives such as an increase in base pay, assistance in finding schools and kindergartens, spousal career counselling, language training, and alternative work arrangements so employees could work at home or commute instead of relocating. • A more career-driven group was open to a move but were concerned about furthering their careers. Managers offered them a cash bonus but focused primarily on their new responsibilities in the reorganized unit, number of direct reports and leadership opportunities. This targeted approach stabilized the new unit at one-quarter of the cost and, one year later, some 80 percent of the staff who received personalized incentives had started to work in the new location. 3. Employee recognition can be better than money One financial services firm that was cutting costs used only nonfinancial measures—including leadership-development programs—to retain the pivotal players at risk of leaving. One year later, none of those players had quit. Praise from a manager to recognise good work, recognition from leaders, promotions, opportunities to lead projects, and chances to join fast-track management programs are often more effective than cash. As companies reinvent themselves for long-term business success, they should also reinvent their approach to determining who is really key to their organization. Offering hidden-gem employees at risk of leaving a tailored mix of financial and nonfinancial incentives can be more effective and will probably save the company money.